Senate Caucus on International Narcotics Control

Hearing on "Dangerous Synthetic Drugs"

Wednesday, September 25, 2013

Prepared Statement of

Co-Chairman Chuck Grassley of Iowa

Madam Chairman, it's been over two years since this caucus held its first hearing on synthetic drug abuse.  At that hearing, we heard testimony from a constituent of mine named Michael Rozga.  Mr. Rozga's son David committed suicide shortly after smoking "K2."  "K2" is synthetic marijuana that is very different from the naturally occurring plant.  David had legally purchased this synthetic drug at a local shopping mall.  He then had a very rapid and negative reaction to it.  I said then that David may have been the first person in the United States to die from using this kind of synthetic drug, but surely he wouldn't be the last.

Sadly, my concerns were validated, as the abuse of synthetic drugs continued to escalate.  From 2010 to 2011, the number of calls received by poison control centers related to synthetic marijuana increased from 2,906 to 6,959.  And similar calls about the synthetic drugs known as "bath salts" increased from 304 to 6,138.  Emergency room visits associated with these synthetic drugs rose sharply as well.

In 2012, Congress responded to this crisis.  I worked with you, Madam Chairman, as well as Senators Schumer, Klobuchar and many others, to pass the Synthetic Drug Abuse Prevention Act of 2012.  That legislation placed many of these synthetic drugs on Schedule I, making them illegal.  That was an important step to help protect our young people from the effects of these drugs.

There is some evidence that that legislation had a positive effect.  In 2012, calls to poison control centers related to synthetic marijuana dropped from 6,959 to 5,205.  Similar calls related to "bath salts" dropped from 6,138 to 2,657.

But new synthetic drugs have emerged since we passed that legislation.  Traffickers need only to alter the chemical structure of their drugs to effectively circumvent the law.  And these drugs continue to ruin lives in communities across the country.

In just the past few weeks, news reports have linked a synthetic form of ecstasy called "Molly" to the deaths of at least four young people in Boston, New York, and here in Washington.  What seems especially concerning is that authorities may not yet have a clear understanding of precisely what substances are contained in "Molly."  Regardless of its precise chemical makeup, there appears little doubt that "Molly" is a clear and present threat to the health and safety of our young people.

My home state of Iowa also continues to be affected by synthetic drugs.   On a single weekend last May, three teenagers in the Des Moines area were sent to emergency rooms after smoking synthetic marijuana.  One of them reportedly suffered cardiac arrest.

There is some good news, however.  In communities across the country, citizens are helping to sound the alarm about the dangers of synthetic drugs.

The Rozga family continues to share David's story.  They have also started a website, K2drugfacts.com, which provides a forum for folks who've survived encounters with synthetic drugs to share their stories.

A community group called "Iowans Against Synthetics" has successfully pushed to have this week declared "Synthetic Drugs Awareness Week" in Johnson County, Iowa.

The Iowa Governor's Office of Drug Control Policy has also taken steps to raise awareness about emerging drug trends such as synthetics.  Beginning this month, the office is issuing a monthly newsletter called The Connection. The newsletter will publish the latest news about new drugs in Iowa and trends among young people.

Wednesday, September 25, 2013

Grassley Presses EPA to Increase Transparency and Address Reports that RIN Market is Being Exploited by Wall Street

WASHINGTON - Senator Chuck Grassley of Iowa is pressing the Environmental Protection Agency (EPA) to increase the transparency of the Renewable Identification Number (RIN) market and provide assurances that the market is functioning for its intended purpose, rather than acting as a profit mechanism for Wall Street banks and other financial institutions.

In a letter to EPA Administrator Gina McCarthy, Grassley wrote, "I'm concerned about recent reports of manipulation or exploitation of the RIN market by non-obligated parties, including financial institutions.  Allegations that the opaqueness of this market is leading to abuse and exploitation by individuals or firms simply to generate profits at the expense of refiners, other obligated parties, and perhaps consumers is troubling."

A copy of the text of Grassley's letter to McCarthy is below.  A signed copy can be found here.

September 25, 2013

The Honorable Gina McCarthy

Administrator

U.S. Environmental Protection Agency

1200 Pennsylvania Avenue NW

Washington, DC 20460

Dear Administrator McCarthy:

I've been a strong supporter of domestically produced biofuels for many years.  The production of homegrown biofuels allows American consumers to use a product that is renewable, cleaner and domestically produced.  The Renewable Fuel Standard has been a great success in achieving higher use of biofuels in our transportation fuel supply.

The Renewable Fuel Standard includes a RIN credit trading system. The RIN credit market was created as part of the Renewable Fuel Standard to provide flexibility and aid obligated parties in complying with their annual renewable volume obligations (RVO's).

I'm concerned about recent reports of manipulation or exploitation of the RIN market by non-obligated parties, including financial institutions.  Allegations that the opaqueness of this market is leading to abuse and exploitation by individuals or firms simply to generate profits at the expense of refiners, other obligated parties, and perhaps consumers is troubling.  The EPA needs to provide assurances that this market is functioning for its intended purpose, rather than acting as a profit mechanism for Wall Street banks and other financial institutions.  For that reason, I'd like the EPA to respond to the following questions.

1.      Other trading markets are regulated to protect market participants against fraud, manipulation and abusive trading practices.  What safeguards does EPA have in place to protect against RIN market manipulation and abuses by non-obligated third parties who are not directly involved in the renewable fuel supply chain?

2.      Please describe the oversight network EPA has in place to ensure that the RIN credit market is not manipulated by obligated parties or non-obligated parties.

3.      Is EPA working to modify the RIN credit market to eliminate manipulation and abusive trading practices like hoarding?  Has EPA considered implementing the type of volatility controls that are present in other markets, such as limits on daily price movements, position limits, etc.?

4.       Is there a way for the general public and all parties who generate, own or trade RINs to discover the market price for RINS through the EPA's EMTS system?  How do the prices reported by third-party industry publications compare to prices reported to the EMTS system?

5.      Why doesn't EPA publicly disclose information that would enhance the transparency of the RIN market?  Has EPA considered providing aggregated data to the public regarding RIN transaction prices, volumes traded, and volumes held by the various segments of the marketplace (i.e., obligated refiners, obligated importers, non-obligated blenders/marketers, and non-obligated third parties with no tie to the supply chain)?

6.      Is it possible for consumers or obligated parties to determine the amount of separated RINs in the market at a given time?  Is it possible at any given time to determine from publicly available data who holds those separated RINs?

7.      To what degree are non-obligated parties with no direct involvement in the fuel supply chain (e.g., financial institutions, speculative investors, etc.) participating in the RIN market?  What percentage of separated RINs are being held by non-obligated parties with no tie to the fuel supply chain?  What percentage are being held by non-obligated blenders, marketers and retailers?

8.      Is the current opaque RIN credit market the best way to achieve a fair, orderly and efficient market that protects market participants and is free of manipulation?

9.      Has EPA considered installing external oversight over the RIN credit market?

It's troubling that there appears to be no way to determine who is trading the credits, at what price, and at what volumes.  It's even more alarming that it's impossible to know the extent of the involvement of financial or other speculators.  It's imperative, to maintain confidence that the pricing of RINs is based on market forces and not manipulation or excessive speculation, that EPA increase the transparency of the market.  By answering these questions, EPA may be able to provide the necessary transparency.

Thank you for your consideration and I look forward to your prompt reply.

Sincerely,

Charles E. Grassley

United States Senator

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Washington D.C. - Congressman Dave Loebsack today announced that the Quad Cities Chamber of Commerce in Davenport and the Bi-State Regional Commission in Rock Island, Illinois, will receive $162,500 to develop plans for the creation of a regional advanced manufacturing innovation hub. The Investing in Manufacturing Communities Partnership (IMCP) award will help diversify the region's economy by focusing on the growth of the vital metal and multi-materials manufacturing cluster. The funds come from the Economic Development Administration's (EDA) Economic Adjustment Assistance program.

"I am pleased that the Quad Cities Chamber of Commerce and the Bi-State Regional Commission received this funding to continue their important work of developing and implementing a comprehensive manufacturing strategy for the region," said Loebsack. "We must focus on growing our economy and putting Iowans back to work. Investing in economic development planning and supporting public-private partnerships will both help strengthen the regional economy and promote job creation."

This competitive grant was designed to accelerate the resurgence of manufacturing and help cultivate an environment for businesses to create well-paying manufacturing jobs in regions across the country. Each FY 2013 IMCP investment supports the development of strategic plans to build public-private partnerships that result in targeted investments in workforce training, infrastructure, research, and other key assets.